Saving Up for Medicare

Let’s get this straight: Medicare pays for very little long-term care, and you’ll still need significant savings to cover the rest of your medical expenses.

But very few retirees have come to terms with that depressing reality.

A new survey of 800 middle-income Americans found that 66% of Medicare recipients – people already on Medicare – did not know if the program covers long-term care or estimate its long-term care coverage.

Despite the fact that the survey was paid for by Bankers Life and Casualty, which sells supplemental Medicare insurance, this sobering finding is still worth thinking about: Two-thirds of those on Medicare also said they pay the same, or more, for healthcare now than when they were working. They have been unpleasantly surprised by the cost of Medicare Part B premiums, what you pay for doctor and outpatient coverage, with 44% paying more than they had expected. Part B premiums for Medicare enrollees with higher incomes are now means-tested, meaning the premiums are charged on a sliding scale.

A nonprofit group, the Employee Benefit Research Institute, estimates that a man with median drug costs would need $65,000 in savings, and a woman would need $93,000, to have a 50-50 chance of having enough money to cover health-care expenses in retirement. To have a 90% chance, a man would need $124,000, and a woman would need $152,000.